Reimagining Public Higher Education

Thank you, Sy. It is always a very great pleasure to join you and the CEI-PEA. It gives me a chance to acknowledge your tremendous work as an educator and a New Yorker.

Most of you know that The City University of New York counts Sy as one of our own. This morning I’d like to begin by telling you about another CUNY student. She is in the Macaulay Honors College at Brooklyn College—and just happens to be one of only 32 Americans chosen this year to be a 2011 Rhodes Scholar.

Zujaja Tauqeer is majoring in history and is part of a combined degree program through which she will earn an M.D. from the New York Downstate College of Medicine. Born in Pakistan, Zujaja and her family, who are Ahmadis, were granted asylum in the United States. Zujaja began intensive research work in high school and still continues her high-level work on the neuroscience of autism and the history of Pakistan.

Zujaja’s extraordinary story is also a quintessentially CUNY story. The University has historically welcomed students from across the globe and encouraged their aspirations. I am delighted that Zujaja has joined us this morning, and I’d like to acknowledge her remarkable accomplishments, along with those of two former CUNY Rhodes Scholars also in attendance this morning: Lev Sviridov, one of our two 2004 scholars, and Lisette Nieves, a 1992 scholar.

All of us at CUNY are deeply proud of all of our Rhodes Scholars. Their talents and their great potential are the reason that we began the Macaulay Honors College in 2001 and why we are so passionate about all of our colleges. Every student deserves the opportunity to fulfill their greatest potential. And every deserving student should get the chance to reap the economic benefits of a college degree—higher lifetime earnings and better job security. Today, the jobless rate for high school graduates is double that of college graduates.

These opportunities have always been part of the historic promise of public higher education. But today, that system is in uncharted territory. Across the country and here in New York, state support for public universities has been declining for the last two decades. And as our recession has deepened, the situation has become more perilous. A recent study indicates that since 2008, at least 43 states have cut assistance to public colleges and universities and/or made large increases in tuition. For example:

The University of California has increased tuition by 40 percent

State funding for the University of Washington was reduced by 26 percent

The state of Michigan cut financial aid by over 60 percent

The Virginia Community College System has seen tuition jump by over 18 percent

Here in New York, state support for CUNY’s senior colleges has been reduced by over $200 million over the past three years. Our community colleges have lost about $29 million in state funding over the past two years, in addition to almost $12 million in city funding this year. In total, the reductions represent 9.5 percent of our current $2.6 million budget. Today, about 60 percent of our budget comes from state and city funding combined, and about 40 percent comes from tuition. In the face of these most recent cuts, we have had to enact a 5 percent tuition increase this spring. CUNY is still the most affordable quality undergraduate choice in the New York metropolitan area—but there is no question that this is a painful decision to make.

Looking forward, states will continue to face serious budget challenges. The fact is that other interests are demanding more state dollars—such as health-care costs and social services for the poor, K-12 education, and corrections.

This point was made recently by Peter Orszag, the former director of the White House Office of Management and Budget. In a New York Times editorial, he noted that as health care costs have risen, higher education budgets have been raided: “Governments’ general support for higher education 25 years ago was nearly 50 percent greater than state spending on Medicaid. That relationship has flipped: Medicaid spending is about 50 percent greater than support for higher education.”

And the recession has hit state coffers hard. A December Times article pointed out that “[m]any states have so much debt—several trillion dollars’ worth, with much of it off the books and hidden from view—that it could overwhelm them in the next few years.” Financial analysts worry most about the long-term problems of a handful of states, including California, Illinois, New Jersey—and New York. As the article said, “New York balanced its budget this year by shortchanging its pension fund” and “delayed payments to vendors and local governments.” Next year will be much worse, as “states and cities typically face their biggest deficits after recessions officially end, as rainy-day funds are depleted”—including the federal stimulus money, which is set to run out this summer. In addition, tax collections are still not back to their pre-recession levels.

The result? With funding decreasing and tuition rising, public higher education is in crisis mode. And let’s not forget that the vast majority of college students—nearly 80 percent—attend public institutions. It is imperative that we prioritize the crisis in public higher education. That’s one reason that CUNY hosted a second “Summit on Public Higher Education” in November, bringing together public system leaders from across the country to creatively consider our financing, our operations, and our mission.

Let’s also remember that when we talk about budgets and financing, we’re really talking about quality—the quality of the graduates we prepare and the research we conduct. This is a time when we need more college graduates, educated to higher levels. Instead, we’re losing ground. A joint National Academies study, an update to its well-known “Gathering Storm” report, has again called for improved education and research in science and engineering. The update points out that:

The United States ranks 20th in the high school completion rate among industrialized nations and 16th in the college completion rate.

And the United States ranks 27th among developed nations in the proportion of college students receiving undergraduate degrees in science or engineering.

This is nothing less a national security issue. Educating the next generation of innovators is critical to our nation’s ability to grow and compete in the global knowledge economy.

This is a time for action. This is a time for re-imagining public higher education. How can we continue to meet the critical mission of educating our country’s citizens without adequate public support? I do not pose that merely as a rhetorical question. It must be answered.

As public higher education is squeezed out of its place in the funding line, public universities often turn to tuition to make up for lost resources—shifting the burden from government to students. At CUNY, we became concerned about this pattern years ago. Big tuition spikes were enacted during economic downturns, when students could least afford them. We determined that we needed a more rational funding model—and that became what we’ve called the CUNY Compact. The compact model of financing creates a partnership between government and the university: state and local governments should cover mandatory costs, and the institution provides resources for investment, through philanthropy, increased efficiency, and modest, predictable tuition increases. The compact is built on incentives: if one partner puts in a share, other partners are more likely to invest, as well.

But with state support continuing to decline, institutions must become even more creative—without overburdening students. How can we create more nimble universities? Can we expand incentivizing partnerships with business and industry that support our educational mission?

Just as university researchers are engaged in inquiry that can lead to new commercialization, so, too, can university leaders engage in inquiry that might lead to new revenue streams. This is a time when the same spirit of “what if?” that drives our academic research must also drive our approach to financing. Universities must become incubators of new ideas, re-orienting themselves to a new environment of institutional entrepreneurism.

For example, one area of opportunity is our real estate. Public-private partnerships offer incentives to all partners and can enable much-needed facilities expansions or upgrades. Universities across the country have used such partnerships to build research facilities, student housing, medical schools, and many other projects. In 2009, CUNY put together a complex public-private partnership to create a new home for our Hunter College School of Social Work and our new School of Public Health in Harlem. This partnership has enabled an accelerated schedule for the project (two years vs. three to four years) and more flexibility in procurement, generating overall savings of more than 10 percent.

For an urban campus like CUNY, public-private partnerships also offer opportunities to gain space where little available land exists for growth and development. A continuing challenge for us is not only finding space for research and classrooms but also for faculty housing. We are working with developers to identify existing residential properties for this purpose. As a university, CUNY has some purchasing advantages, including exemptions from real estate tax, transfer taxes, and mortgage recording taxes, as well as access to tax-exempt financing.

CUNY’s concept would allow current residents to stay in their apartments. As units become available, CUNY would utilize them for faculty, staff, and administration. In addition, we’d like to make affordable housing available for New York City schoolteachers and other public employees, such as firefighters and police officers. In this way, CUNY would advance the goal of affordable housing, develop faculty housing, and build some revenue to add to our endowment—enabling us, ultimately, to build a better public higher education system.

Likewise, we hope that a public-private partnership—again, one built on incentives—will enable us to gain space for CUNY’s new community college, set to open in 2012 in Manhattan. The new college re-imagines the traditional community college structure in order to improve students’ graduation rates and their career prospects.

I am very pleased that the founding president of the new community college officially began work this month and is with us today. Dr. Scott Evenbeck was recruited from Indiana University-Purdue University at Indianapolis and is a prominent expert on education assessment and initiatives to boost student success. Also with us today is CUNY’s new vice chancellor for student affairs, Frank Sanchez, who comes from the University of Colorado and has extensive experience in fostering student leadership and degree completion. I am delighted to welcome both of them here.

To find a home for the new community college in the crowded Manhattan landscape, we are in the early stages of initiating a new public-private development. The project would utilize the site of a building called North Hall on the John Jay College of Criminal Justice campus. The campus is currently moving from North Hall to a new facility now under construction. Under the proposed partnership, CUNY would sell a portion of the North Hall site to a private developer and retain the balance of the site for the new community college. The partnership would enable CUNY to finance a portion of the new college’s facility with proceeds from the sale, without relying on the state for the full appropriation. CUNY envisions a mixed-use building to be built by the developer—the University would own the lower portion of the building and use it for the new community college, while the upper floors would be developed as residential or commercial units.

Real estate isn’t the only area where possibilities for entrepreneurship exist for public universities. At CUNY we must avail ourselves of all ideas and incubate multiple lines of inquiry that have potential for revenue. Consider, for example, that a couple of months ago, Amazon, the online retailer, reached a new milestone: it sold more e-books than paper books. As e-readers take firm hold in the marketplace, we are looking at them as one way to address the rising costs of textbooks. E-books are generally about one-third the cost of traditional textbooks.

CUNY has initiated an innovative partnership with the New York City Department of Education and IBM to explore the use of e-textbooks in K-12 classrooms. Next month, a pilot program will test the use of selected textbooks on Kindle readers with ninth graders at Stuyvesant High School. Course textbooks in world history, biology, and geometry will be downloaded onto readers used by each student. Eventually, CUNY will develop programs to supplement the e-textbook material and market them to school districts throughout the country, with the goal of improving learning and generating a new revenue stream for the University. By fully utilizing available technology, the three partners—CUNY, IBM, and the DOE—will be able to hold down costs and offer students tools that will better prepare them for college-level work.

In addition, many of you may have seen that just last month, Mayor Bloomberg, Deputy Mayor for Economic Development Robert Steel, and New York City Economic Development Corporation President Seth Pinsky released a Request for Expression of Interest, seeking responses from a university, applied science organization, or related institution to develop and operate an applied sciences research facility in New York City. The city is looking to strengthen its applied sciences capabilities, particularly in fields that lend themselves to commercialization—including quick job creation from innovation. Later today, CUNY will be initiating a conversation with the leaders of Columbia University, The Cooper Union, Mt. Sinai School of Medicine, NYU, and Cornell to coordinate a response to the city’s request.

I offer all of these ideas today as stimulus for thinking—a few “what ifs?” in reimagining CUNY’s finances and creatively building our revenue streams. As in any robust research enterprise, many “what ifs” are necessary. Some will fail; some will flourish. But all ideas that incentivize revenue are urgently needed, especially now, as both governments and families struggle to regain ground.

And let’s not forget the most critical point: securing the health of our public higher education system is essential to our state and our country’s health. We desperately need the inventors, creators, and entrepreneurs of the next generation—not just a few, but an entire citizenry with the skills, knowledge, and drive to generate a constant flow of ideas. We need many more Zujajas, Levs, and Lisettes—students who, given the opportunity to be challenged by a rigorous public education, are prepared to be the next global leaders.

Last week, newly elected governor Andrew Cuomo delivered his inaugural State of the State address and strongly enforced the idea that the way in which state government is run must be changed. We can no longer continue on the same course in this time of great fiscal exigency.

In times of crisis, we must also be mindful of building toward the future. What better way to secure the intellectual capital needed in our rapidly transformed innovation economy than through education? As CUNY prepares to deal with its significant financial challenges, we must also prepare the next generation of New Yorkers. And that means that we must secure the core of our enterprise. We cannot gamble with the talent that will drive New York’s competitiveness in the decades ahead. It’s the most important investment we can make in New York’s future.